KLM Royal Dutch Airlines
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- KLM Royal Dutch Airlines
P.O. Box 7700
1117 ZL Schiphol
- Main hub
- Amsterdam Schiphol Airport
- Business model
- Full Service Carrier
- Domestic | International
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- Part of Air France-KLM S.A.
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Established in 1920, KLM Royal Dutch Airlines is the national carrier of the Netherlands. KLM operates an extensive network which includes services within Europe and to Asia, Africa, North America, Central and South America and the Middle East. The carrier also operates freight services, and handles all service operations from its hub at Amsterdam Schiphol Airport. KLM is a founding member of the SkyTeam alliance, and is part of Air France-KLM S.A.
Location of KLM Royal Dutch Airlines main hub (Amsterdam Schiphol Airport)
2,853 total articles
239 total articles
HNA of Hainan Airlines buys 24% of Azul as China's airlines eye their final continent: South America
Having established a footprint in Australia, Europe and North America, this year Chinese airlines turned their attention – with government direction – to Africa. Now they are closing in on their latest continent: South America. China's HNA Group, which owns flagship Hainan Airlines, disclosed on 24-Nov-2015 that it would take a 24% stake in Azul for USD450 million, becoming the largest shareholder of Brazil's third largest airline.
This stake is HNA's largest airline acquisition by value, and most significant outside greater China. It follows a separate non-airline transaction in recent days and a slew of acquisitions over the summer, including Swissport, bringing known acquisition spend to over USD11 billion in a handful of months.
Unlike the US and European investments in Latin American carriers, HNA's objective is different. It wants to link South America with China but also, by all indications, to learn about an efficient domestic operation, which Azul has created in its own right. Air China serves São Paulo while other Chinese airlines rely on partners, but more fifth freedom Chinese services into Latin America are expected. Vancouver, the most popular North American point for Chinese carriers, hopes China will ask Canada for beyond rights to connect China with Latin America over Vancouver.
Chinese airlines have finally kick-started international growth, expanding 37% in the first eight months of 2015. This equates to an additional 7.38 million passengers in 8M2015 compared to 8M2014. This almost equals the 7.39m passengers Chinese carriers added between 8M2010 and 8M2014. The volume growth Chinese carriers used to achieve over four years is now being achieved over just a single year.
With countries continuing to liberalise visas for Chinese nationals, and the Chinese government directing airlines to expand internationally, this faster international growth is the new norm. Although most international Chinese traffic is short haul, the accelerated growth is seen with long haul expansion: Sichuan Airlines launched long haul flights in 2012 and not another Chinese carrier went long haul until Xiamen Airlines in Jul-2015. Beijing Capital Airlines followed in Sep-2015, and 2016 could see two more airlines – Tianjin Airlines and Tibet Airlines – fly long haul. 2016 will see at least 10 Chinese airlines operate widebody aircraft. This report looks at the long haul growth from China's secondary carriers that will increasingly become intercontinental names.
Results for 3Q2015 again demonstrated IAG's superior profitability compared with rivals Air France-KLM and the Lufthansa group. IAG's 3Q operating margin of 18.5% was around 6ppts higher than those of the other two. However, all three enjoyed sharp year on year improvements in profits, mainly thanks to lower fuel prices. Both IAG and Lufthansa raised their FY2015 profit targets, but Air France-KLM has not gained sufficient confidence to set a target for the year, in spite of posting the greatest increase in operating profit in 3Q.
The unit revenue environment continued to be weak for Europe's big three legacy airline groups, although it improved slightly in 3Q2015 relative to 2Q. This weakness partly reflects a hazy economic outlook and partly reflects strong levels of competition, particularly on routes to emerging markets. Unit revenue weakness is also a function of management decisions on capacity growth. On the North Atlantic, where capacity growth is tightly contained and competition is less fierce, unit revenue weakness has been more limited.
If a nation is not a country until it has a local beer and airline, then an extension may be that the carrier needs to fly to London. That is based on the constant theme for Asian carriers – such as Garuda, Philippine Airlines and Vietnam Airlines – opening routes to London and maintaining them despite financial pressures. But this does not apply to China. Chinese airlines have as many seats to Italy as to the UK; more Chinese tourists fly to New Zealand than to the UK. All seven of China's long haul carriers intend to fly to Australia but only four will fly to the UK.
This backwater issue is a problem for UK tourism - and for British Airways. Concurrent with President Xi's visit to the UK, visa restrictions will be loosened for Chinese nationals. But this is not enough; British tourism is hurt by the UK not being a member of the Schengen zone, where Chinese visitors can apply for one visa and visit multiple countries on one trip. The resulting limited Chinese interest in the UK hurts British Airways, which has the smallest presence of major European carriers in China. Finnair for one is bigger, furthering the case for deeper IAG-Finnair ties, or even a takeover. BA has a strong if quiet strategy to grow its China business, but still needs more support.
Jumping from specialist media and the business pages, Air France's struggle to restore profits by confronting industrial relations issues has received the attention of global mainstream media. Images of Air France managers stripped of the shirts have been seen across the world.
Air France failed to agree with flight crew unions on improved labour productivity by its self-imposed deadline of 30-Sep-2015. As a result, it decided to implement its alternative plan of cutting back on long haul operations and staff numbers. Although the employees that attacked management presenting the plan to the Works Council may not be fully representative of the Air France workforce, the episode holds up a mirror to both labour and management.
The mirror is cracked and Air France has had seven years of losses. It does not report separate results, but CAPA has pieced together an analysis of Air France's financial performance since the KLM merger in 2004. Its margins have been below KLM's throughout and also lag other European airlines. At the heart of its problem is low labour productivity. Improvements in this area will be vital to a sustainable future for Air France.
Managing dual hubs is typically a challenge. Chinese carriers try to squeeze into each other's hubs, Japan Airlines has such a limited presence outside the capital some joke it should be called Tokyo Airlines while Lufthansa's preference for Frankfurt sees a reduced size at Munich and no long-haul services from other cities such as Berlin.
In Korea the opportunity has effectively been taken away, with the government restricting long-haul services from the second largest city in order to boost its flagship Seoul Incheon hub at a time Asian countries – Northeast Asia in particularly – are undertaking rapid long-haul growth.
Changes with the US and Netherlands could produce Busan's first long-haul service since Lufthansa ended a quasi-long-haul link to Busan (tagged with Seoul Incheon). But it is regional services that hold the most opportunity for Busan; 74% of international seat capacity is within Northeast Asia. The LCC sector especially holds growth, with Busan seeing over half of international seats flown by LCCs, largely due to local carrier Air Busan.